9911796707
TMI Blog1931 (2) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... re Government officials, who along with another are sleeping partners, while the remaining two work as managing and assistant managing partners respectively. In the year 1923-1921 the two last-named received salaries of ₹ 135 and ₹ 110 per mensem respectively. It was then claimed that these salaries should be deducted from the profits before the assessment of Income Tax was made. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... especially when no fresh facts justifying the reopening of the question of partners' salaries have been put forth and proved by the assessing authority. 2. Whether the salaries charged by the working partners 1 and 2 are not legal expenses incurred for the purposes of earning profits within the meaning of Section 10(2)(9), Income Tax Act. 3. As regards question 1 the answer must obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm might pay him a remuneration which would be a legitimate deduction from the assessable income of the firm. But obviously considering the opportunities for fraud that any such alleged arrangement would offer, very strict proof would reasonably be required of the existence of such an arrangement. 5. The learned Judicial Commissioner quoted this remark and then went on to say as follows: But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The dual capacity of a partner cum employee, though, suspect, is 'possible and to the extent that the person is in truth an employee the salary is deductible from the profits of the partnership. 8. My answer to question 2 would be as given above and with that statement of the law it remains for the Income Tax Commissioner to see whether as a fact these particular partners are true emp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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